Browse Arkansas Code titles and sections
26 U.S.C. § 1296 — Election of mark to market for marketable stock
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** In the case of marketable stock in a passive foreign investment company which is owned (or treated under subsection (g) as owned) by a United States person at the close of any taxable year of such person, at the election of such person—
(1) If the fair market value of such stock as of the close of such taxable year exceeds its adjusted basis, such United States person shall include in gross income for such taxable year an amount equal to the amount of such excess.
(2) If the adjusted basis of such stock exceeds the fair market value of such stock as of the close of such taxable year, such United States person shall be allowed a deduction for such taxable year equal to the lesser of—
(A) the amount of such excess, or
(B) the unreversed inclusions with respect to such stock.
**(b) Basis adjustments**
(1) **In general** — The adjusted basis of stock in a passive foreign investment company—
(A) shall be increased by the amount included in the gross income of the United States person under subsection (a)(1) with respect to such stock, and
(B) shall be decreased by the amount allowed as a deduction to the United States person under subsection (a)(2) with respect to such stock.
(2) **Special rule for stock constructively owned** — In the case of stock in a passive foreign investment company which the United States person is treated as owning under subsection (g)—
(A) the adjustments under paragraph (1) shall apply to such stock in the hands of the person actually holding such stock but only for purposes of determining the subsequent treatment under this chapter of the United States person with respect to such stock, and
(B) similar adjustments shall be made to the adjusted basis of the property by reason of which the United States pe
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1296
Stored review status: release_metadata_unconfirmed. A text match is a research starting point; applicability is not established.
Original supplied file — preserved unchanged
Download original Markdown file
File SHA-256: b4044cd1a5b9c268045ba37b5a8ae5337a8584337115d65b03127fbd51e7aa9c. The original may include catalog metadata, neighboring provisions, or embedded records outside this collection's scope. Search shows only the selected federal record. Historical editions and unverified snapshots are not a statement of current law.
Authority boundary: historical or unconfirmed source not current law verified.
Open the recorded source website ↗
Record provenance
Stable record: federal_law:legal_authorities:record_usc_454450e8ccddb68e5cf57dbf
Source file: Laws/federal/codes/united-states-code/title-26/section-1296-election-of-mark-to-market-for-marketable-stock--1f8c75c0d6.md
Pages: Not recorded – Not recorded
Passage SHA-256: da9c08412a3e06f1f8f71090b300eab2fc8e7492a90b47191dc4a37b2c391eb3
Source location: Title 26, Chapter 1, § 1296; chapter-001-normal-taxes-and-surtaxes.md
Stored source content
**(a) General rule** In the case of marketable stock in a passive foreign investment company which is owned (or treated under subsection (g) as owned) by a United States person at the close of any taxable year of such person, at the election of such person—
(1) If the fair market value of such stock as of the close of such taxable year exceeds its adjusted basis, such United States person shall include in gross income for such taxable year an amount equal to the amount of such excess.
(2) If the adjusted basis of such stock exceeds the fair market value of such stock as of the close of such taxable year, such United States person shall be allowed a deduction for such taxable year equal to the lesser of—
(A) the amount of such excess, or
(B) the unreversed inclusions with respect to such stock.
**(b) Basis adjustments**
(1) **In general** — The adjusted basis of stock in a passive foreign investment company—
(A) shall be increased by the amount included in the gross income of the United States person under subsection (a)(1) with respect to such stock, and
(B) shall be decreased by the amount allowed as a deduction to the United States person under subsection (a)(2) with respect to such stock.
(2) **Special rule for stock constructively owned** — In the case of stock in a passive foreign investment company which the United States person is treated as owning under subsection (g)—
(A) the adjustments under paragraph (1) shall apply to such stock in the hands of the person actually holding such stock but only for purposes of determining the subsequent treatment under this chapter of the United States person with respect to such stock, and
(B) similar adjustments shall be made to the adjusted basis of the property by reason of which the United States person is treated as owning such stock.
**(c) Character and source rules**
(1) **Ordinary treatment**
(A) *Gain* — Any amount included in gross income under subsection (a)(1), and any gain on the sale or other disposition of marketable stock in a passive foreign investment company (with respect to which an election under this section is in effect), shall be treated as ordinary income.
(B) *Loss* — Any—
(i) amount allowed as a deduction under subsection (a)(2), and
(ii) loss on the sale or other disposition of marketable stock in a passive foreign investment company (with respect to which an election under this section is in effect) to the extent that the amount of such loss does not exceed the unreversed inclusions with respect to such stock,
shall be treated as an ordinary loss. The amount so treated shall be treated as a deduction allowable in computing adjusted gross income.
(2) **Source** — The source of any amount included in gross income under subsection (a)(1) (or allowed as a deduction under subsection (a)(2)) shall be determined in the same manner as if such amount were gain or loss (as the case may be) from the sale of stock in the passive foreign investment company.
**(d) Unreversed inclusions** For purposes of this section, the term “unreversed inclusions” means, with respect to any stock in a passive foreign investment company, the excess (if any) of—
(1) the amount included in gross income of the taxpayer under subsection (a)(1) with respect to such stock for prior taxable years, over
(2) the amount allowed as a deduction under subsection (a)(2) with respect to such stock for prior taxable years.
The amount referred to in paragraph (1) shall include any amount which would have been included in gross income under subsection (a)(1) with respect to such stock for any prior taxable year but for section 1291. In the case of a regulated investment company which elected to mark to market the stock held by such company as of the last day of the taxable year preceding such company’s first taxable year for which such company elects the application of this section, the amount referred to in paragraph (1) shall include amounts included in gross income under such mark to market with respect to such stock for prior taxable years.
**(e) Marketable stock** For purposes of this section—
(1) **In general** — The term “marketable stock” means—
(A) any stock which is regularly traded on—
(i) a national securities exchange which is registered with the Securities and Exchange Commission or the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or
(ii) any exchange or other market which the Secretary determines has rules adequate to carry out the purposes of this part,
(B) to the extent provided in regulations, stock in any foreign corporation which is comparable to a regulated investment company and which offers for sale or has outstanding any stock of which it is the issuer and which is redeemable at its net asset value, and
(C) to the extent provided in regulations, any option on stock described in subparagraph (A) or (B).
(2) **Special rule for regulated investment companies** — In the case of any regulated investment company which is offering for sale or has outstanding any stock of which it is the issuer and which is redeemable at its net asset value, all stock in a passive foreign investment company which it owns directly or indirectly shall be treated as marketable stock for purposes of this section. Except as provided in regulations, similar treatment as marketable stock shall apply in the case of any other regulated investment company which publishes net asset valuations at least annually.
**(f) Treatment of controlled foreign corporations which are shareholders in passive foreign investment companies** In the case of a foreign corporation which is a controlled foreign corporation and which owns (or is treated under subsection (g) as owning) stock in a passive foreign investment company—
(1) this section (other than subsection (c)(2)) shall apply to such foreign corporation in the same manner as if such corporation were a United States person, and
(2) for purposes of subpart F of part III of subchapter N—
(A) any amount included in gross income under subsection (a)(1) shall be treated as foreign personal holding company income described in section 954(c)(1)(A), and
(B) any amount allowed as a deduction under subsection (a)(2) shall be treated as a deduction allocable to foreign personal holding company income so described.
**(g) Stock owned through certain foreign entities** Except as provided in regulations—
(1) **In general** — For purposes of this section, stock owned, directly or indirectly, by or for a foreign partnership or foreign trust or foreign estate shall be considered as being owned proportionately by its partners or beneficiaries. Stock considered to be owned by a person by reason of the application of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned by such person.
(2) **Treatment of certain dispositions** — In any case in which a United States person is treated as owning stock in a passive foreign investment company by reason of paragraph (1)—
(A) any disposition by the United States person or by any other person which results in the United States person being treated as no longer owning such stock, and
(B) any disposition by the person owning such stock,
shall be treated as a disposition by the United States person of the stock in the passive foreign investment company.
**(h) Coordination with section 851(b)** For purposes of section 851(b)(2), any amount included in gross income under subsection (a) shall be treated as a dividend.
**(i) Stock acquired from a decedent** In the case of stock of a passive foreign investment company which is acquired by bequest, devise, or inheritance (or by the decedent’s estate) and with respect to which an election under this section was in effect as of the date of the decedent’s death, notwithstanding section 1014, the basis of such stock in the hands of the person so acquiring it shall be the adjusted basis of such stock in the hands of the decedent immediately before his death (or, if lesser, the basis which would have been determined under section 1014 without regard to this subsection).
**(j) Coordination with section 1291 for first year of election**
(1) **Taxpayers other than regulated investment companies**
(A) *In general* — If the taxpayer elects the application of this section with respect to any marketable stock in a corporation after the beginning of the taxpayer’s holding period in such stock, and if the requirements of subparagraph (B) are not satisfied, section 1291 shall apply to—
(i) any distributions with respect to, or disposition of, such stock in the first taxable year of the taxpayer for which such election is made, and
(ii) any amount which, but for section 1291, would have been included in gross income under subsection (a) with respect to such stock for such taxable year in the same manner as if such amount were gain on the disposition of such stock.
(B) *Requirements* — The requirements of this subparagraph are met if, with respect to each of such corporation’s taxable years for which such corporation was a passive foreign investment company and which begin after December 31, 1986, and included any portion of the taxpayer’s holding period in such stock, such corporation was treated as a qualified electing fund under this part with respect to the taxpayer.
(2) **Special rules for regulated investment companies**
(A) *In general* — If a regulated investment company elects the application of this section with respect to any marketable stock in a corporation after the beginning of the taxpayer’s holding period in such stock, then, with respect to such company’s first taxable year for which such company elects the application of this section with respect to such stock—
(i) section 1291 shall not apply to such stock with respect to any distribution or disposition during, or amount included in gross income under this section for, such first taxable year, but
(ii) such regulated investment company’s tax under this chapter for such first taxable year shall be increased by the aggregate amount of interest which would have been determined under section 1291(c)(3) if section 1291 were applied without regard to this subparagraph.
Clause (ii) shall not apply if for the preceding taxable year the company elected to mark to market the stock held by such company as of the last day of such preceding taxable year.
(B) *Disallowance of deduction* — No deduction shall be allowed to any regulated investment company for the increase in tax under subparagraph (A)(ii).
**(k) Election** This section shall apply to marketable stock in a passive foreign investment company which is held by a United States person only if such person elects to apply this section with respect to such stock. Such an election shall apply to the taxable year for which made and all subsequent taxable years unless—
(1) such stock ceases to be marketable stock, or
(2) the Secretary consents to the revocation of such election.
**(l) Transition rule for individuals becoming subject to United States tax** If any individual becomes a United States person in a taxable year beginning after December 31, 1997, solely for purposes of this section, the adjusted basis (before adjustments under subsection (b)) of any marketable stock in a passive foreign investment company owned by such individual on the first day of such taxable year shall be treated as being the greater of its fair market value on such first day or its adjusted basis on such first day.
Cross-references
Connections may be documented source relationships, shared citations or nearby passages. Each explains its basis; a connection alone does not establish applicability to your situation.
Federal law — U.S. Code and appendices · legal_authorities
**(a) Exclusion** Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more.
**(b) Limitations**
(1) **In general** — The amount of gain excluded from gross income under subsection (a) with respect to any sale or exchange shall not exceed $250,000.
(2) **Special rules for joint returns** — In the case of a husband and wife who make a joint return for the taxable year of the sale or exchange of the property—
(A) *$500,000 Limitation for certain joint returns* — Paragraph (1) shall be applied by substituting “$500,000” for “$250,000” if—
(i) either spouse meets the ownership requirements of subsection (a) with respect to such property;
(ii) both spouses meet the use requirements of subsection (a) with respect to such property; and
(iii) neither spouse is ineligible for the benefits of subsection (a) with respect to such property by reason of paragraph (3).
(B) *Other joint returns* — If such spouses do not meet the requirements of subparagraph (A), the limitation under paragraph (1) shall be the sum of the limitations under paragraph (1) to which each spouse would be entitled if such spouses had not been married. For purposes of the preceding sentence, each spouse shall be treated as owning the property during the period that either spouse owned the property.
(3) **Application to only 1 sale or exchange every 2 years** — Subsection (a) shall not apply to any sale or exchange by the taxpayer if, during the 2-year period ending on the date of such sale or exchange, there was any other sale or exchange by the taxpayer to which subsec
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 121
Stored review status: release_metadata_unconfirmed. Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** The accumulated earnings tax imposed by section 531 shall apply to every corporation (other than those described in subsection (b)) formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.
**(b) Exceptions** The accumulated earnings tax imposed by section 531 shall not apply to—
(1) a personal holding company (as defined in section 542),
(2) a corporation exempt from tax under subchapter F (section 501 and following), or
(3) a passive foreign investment company (as defined in section 1297).
**(c) Application determined without regard to number of shareholders** The application of this part to a corporation shall be determined without regard to the number of shareholders of such corporation.
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 532
Stored review status: release_metadata_unconfirmed. Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1
Stored review status: release_metadata_unconfirmed. Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** For purposes of this part, except as otherwise provided in this subpart, the term “passive foreign investment company” means any foreign corporation if—
(1) 75 percent or more of the gross income of such corporation for the taxable year is passive income, or
(2) the average percentage of assets (as determined in accordance with subsection (e)) held by such corporation during the taxable year which produce passive income or which are held for the production of passive income is at least 50 percent.
**(b) Passive income** For purposes of this section—
(1) **In general** — Except as provided in paragraph (2), the term “passive income” means any income which is of a kind which would be foreign personal holding company income as defined in section 954(c).
(2) **Exceptions** — Except as provided in regulations, the term “passive income” does not include any income—
(A) derived in the active conduct of a banking business by an institution licensed to do business as a bank in the United States (or, to the extent provided in regulations, by any other corporation),
(B) derived in the active conduct of an insurance business by a qualifying insurance corporation (as defined in subsection (f)),
(C) which is interest, a dividend, or a rent or royalty, which is received or accrued from a related person (within the meaning of section 954(d)(3)) to the extent such amount is properly allocable (under regulations prescribed by the Secretary) to income of such related person which is not passive income, or
(D) which is export trade income of an export trade corporation (as defined in section 971).
For purposes of subparagraph (C), the term “related person” has the meaning given such term by section 954(d)(3) determined by substituting “foreign corporat
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1297
Stored review status: release_metadata_unconfirmed. Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
**(a) Congressional findings; facilitating establishment of national market system for securities; designation of qualified securities**
(1) The Congress finds that—
(A) The securities markets are an important national asset which must be preserved and strengthened.
(B) New data processing and communications techniques create the opportunity for more efficient and effective market operations.
(C) It is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure—
(i) economically efficient execution of securities transactions;
(ii) fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets;
(iii) the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities;
(iv) the practicability of brokers executing investors’ orders in the best market; and
(v) an opportunity, consistent with the provisions of clauses (i) and (iv) of this subparagraph, for investors’ orders to be executed without the participation of a dealer.
(D) The linking of all markets for qualified securities through communication and data processing facilities will foster efficiency, enhance competition, increase the information available to brokers, dealers, and investors, facilitate the offsetting of investors’ orders, and contribute to best execution of such orders.
(2) The Commission is directed, therefore, having due regard for the public interest, the protection of investors, and the maintenance of fair and orderly markets, to use its authority under this chapter to facilitate the establishment of a national market system for securities (which may include s
Source: Supplied U.S. Code snapshot — release unconfirmed · 15 U.S.C. § 78k–1
Stored review status: release_metadata_unconfirmed. Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
Page 2414
TITLE 26—INTERNAL REVENUE CODE
§ 1296
the 15th day of the 3rd month of the following taxable
year. To the extent provided in regulations, such an
election may be made later than as required by the pre-
ceding sentence in cases where the company failed to
make a timely election because it reasonably believed
it was not a passive foreign investment company.’’
Pub. L. 100–647, § 1012(p)(37)(A), inserted sentence at
end of par. (2) permitting a later election when a com-
pany reasonably believed it was not a passive foreign
investment company.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1012(p)(37)(A) of Pub. L.
100–647 effective, except as otherwise provided, as if in-
cluded in the provision of the Tax Reform Act of 1986,
Pub. L. 99–514, to which such amendment relates, see
section 1019(a) of Pub. L. 100–647, set out as a note
under section 1 of this title.
Pub. L. 100–647, title VI, § 6127(c), Nov. 10, 1988, 102
Stat. 3715, provided that:
‘‘(1) IN GENERAL.—The amendments made by this sec-
tion [amending this section and section 1291 of this
title] shall take effect as if included in the amendments
made by section 1235 of the Reform Act [Pub. L. 99–514].
‘‘(2) TIME FOR MAKING ELECTION.—The period during
which an election under section 1295(b) of the 1986 Code
may be made shall in no event expire before the date 60
days after the date of the enactment of this Act [Nov.
10, 1988].’’
EFFECTIVE DATE
Section applicable to taxable years of foreign cor-
porations beginning after Dec. 31, 1986, see section
1235(h) of Pub. L. 99–514, set out as a note under section
1291 of this title.
EXPIRATION OF SUBSECTION (b) ELECTION PERIOD
Pub. L. 100–647, title I, § 1012(p)(37)(B), Nov. 10, 1988,
102 St
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 1296
Stored review status: historical_2024_not_currentness_verified. Same stored citation; legal effect and authority still require review.